Co-working space operator WeWork has been dogged by cash flow problems and was forced to lay off about a fifth of its workforce last year, but it remains in robust health in Southeast Asia, it seems.

The layoffs – with 2,400 workers affected – did not heavily affect Singapore or Southeast Asia, said Turochas Fuad, WeWork managing director for the region.

“Because of the fact that Singapore is a very profitable market, the impact was definitely less significant compared to the global numbers,” he noted.

“If your region is doing well, there is no reason to slow down or right-size too much.”

Fuad told The Straits Times last week that the regional arm intends to continue expanding into new office spaces in Singapore and the rest of Southeast Asia.

“It will not be the same aggressive growth [of the last two years], but a more calculated growth where it is more focused on ensuring fast profitability and returns on investments.”

Fuad noted that the Singapore outfit, which has around 200 staff, turned profitable within its first year of operation.

Its headcount includes architects, engineers, sales and tech staff, as well as community managers who oversee the co-working offices.

WeWork’s foray into Singapore and the region began in December 2017 when it acquired Spacemob, which was founded by Fuad.

The last few months have been tough, he acknowledged, after the money-losing company’s planned initial public offering in New York collapsed in September.

It was announced in October that WeWork was on the brink of running out of cash, which prompted a $9.5 billion bailout by its key backer SoftBank Group.

Fuad said WeWork is focusing on going back to its core foundation as a company, to provide a good experience for the members of its flexible working spaces.

“What we’re doing is to tweak our approach and focus very much on profitability, balancing that with member-first experience and getting [the business] to be as self-sustaining as possible,” he added.

The Straits Times understands that WeWork has been aggressively expanding in the past two years – with capacity growing more than 18-fold. It has 12 locations in Singapore, with nine in the central business district. However growth will be more restrained this year.

“It will be more targeted and controlled expansion, to ensure that the kind of structure, the kind of leases that we sign, are more focused on profitability,” Fuad noted.

It has three more sites slated to open in Singapore this year, including the 21-storey building at 21 Collyer Quay occupied by HSBC. Fuad said WeWork is looking to start operations at the building around the end of the year.

Fuad said that while the Southeast Asia team works very closely with its headquarters in the US, the regional group is “a very standalone, self-sustaining structure” – with its own interior designers, software developers and other staff – which allows its Singapore unit and other offices in the region to operate independently.

This is because the company has always taken a “glocalised” approach, he added.

“We are a global company, but we are very localised in our approach, in terms of the offerings, pricing, design and down to the technology that is built for this part of the world,” Fuad said.

The flexible working space operator has broadened its revenue streams, having started leasing event spaces in its offices to both members and external parties since the first half of last year.

Leasing event spaces “allows us to maximise our monetisation efforts, and as these are ready spaces, it allows us to [boost] our profit margins as well”, he said.

Fuad added that WeWork is looking at offering value-added services revolving around productivity to its members in the near future, such as by leveraging its regional network of partners to provide physical and software services to help companies which are expanding in Southeast Asia set up their businesses.

But the core part of its business is still centred on flexible work arrangements, he noted.

While analysts say that co-working space operators backed by landlords and developers are more resilient, Fuad said that they focus more on the locations where buildings are situated.

“It gives us that flexibility, and it allows us to form the right partnerships with landlords,” he said, adding that the company’s focus is that it follows the demand from businesses to get the locations which it deems to be right for its operations.

WeWork in Singapore as well as the region will continue to focus on “the best and most premium locations”, and continue to look for opportunities to increase its supply of offices here as the demand for co-working spaces remains robust.

Fuad said: “In the past two years in Southeast Asia, we have learnt about local needs, not just about the large multinational corporations, but also regional and local enterprises.

“We are going to be quite smart about selecting the right spaces that fit the demand, the demographics and the requirements for the local regions that we have.”

THE STRAITS TIMES/ASIA NEWS NETWORK